October's 161,000 net new jobs missed expectations, but unemployment still dropped to 4.9 percent, as signs point to a potential interest rate hike in December.
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November 2016 U.S. employment update and outlook
1. U.S. employment situation: September 2013
Release date: October 22, 2013
Low unemployment pushing up
wages even as job creation slows
U.S. employment situation: October 2016 November 4, 2016
2. October 2016 employment summary
• Contractions and slowdowns in key subsectors pulled down October growth
- October saw 161,000 net new jobs, not meeting consensus expectations of 170,000-175,000 from many observers. However, revisions to
previous months were positive and brought year-to-date growth to 1.9 million jobs. This is still below the YTD 2015 figure of 2.2 million, but
volatility has been spurred by minimal slack and ability to recruit talent in many primary and secondary markets at the same rate as in 2014
and 2015.
- A small contraction in retail trade (-1,100 jobs) and a sharp slowdown in leisure and hospitality (+10,000 jobs), traditionally two of the
largest contributors to monthly growth, pulled down October gains. Other major subsectors such as PBS, health and construction, were
mostly stable over the month. Combined with flat expansion of the civilian labor force, unemployment dropped to 4.9 percent.
• Despite slower growth, wages rose at their fastest rate since 2009
- The highlight of October was wage growth, with 12-month gains totaling 2.8 percent, the highest figure since 2009. Across the board, with
the notable exception of education and health, wages rose by more than 2.0 percent, with most in excess of 3.0 percent.
- Sustained and accelerating wage growth will continue to play a critical role in keeping personal consumption expenditures elevated.
Consumer spending has been and will remain necessary for GDP growth in the absence of business investment.
• Fed rate hike likelier due to stability in job creation and rising inflation and wages
- Although the Federal Reserve once again did not raise interest rates in November, continued growth in the labor market and in particular
upward pressure on wages bodes well for a potential rate hike in December.
- More importantly, the consumer price index is beginning to make a more sustained rebound: after being near-zero for much of 2016, it is
now up 1.5 year-over-year. This is below the 2.0-percent target, but the core index (excluding food and energy) is up to 2.2 percent. With
wage growth outpacing inflation and rising steadily, fundamentals are likely strong enough for the Fed to act.
Source: JLL Research, Bureau of Labor Statistics
2
3. October 2016 U.S. labor market at a glance
+161,000
(73 consecutive months
of growth)
1-month net change
+2,357,000
(+1.7% y-o-y)
12-month change
+783,000
10-year average annual growth
Source: JLL Research, Bureau of Labor Statistics
4.9%
Unemployment rate
-10bp
12-month change in unemployment
62.8%
Labor force participation rate
5,443,000
(+2.5% y-o-y)
Job openings
5,210,000
(+3.0% y-o-y)
Hires
2,981,000
(+4.4% y-o-y)
Quits
3
4. October added a below-average 161,000 net new jobs, but
revisions to earlier data bring YTD figure up to 1.9 million
360,000
226,000
243,000
96,000
110,000
88,000
106,000
122,000
221,000
183,000
164,000
196,000
360,000
226,000
243,000
96,000
110,000
88,000
160,000
150,000
161,000
225,000
203,000
214,000
197,000
280,000
141,000
203,000
199,000
201,000
149,000
202,000
164,000
237,000
274,000
84,000
166,000
188,000
225,000
330,000
236,000
286,000
249,000
213,000
250,000
221,000
423,000
329,000
221,000
265,000
84,000
251,000
273,000
228,000
277,000
150,000
149,000
295,000
280,000
262,000
168,000
233,000
186,000
277,000
24,000
271,000
252,000
176,000
191,000
161,000
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
2011
2012
2013
2014
2015
2016
1-monthnetchange
4
Source: JLL Research, Bureau of Labor Statistics
5. A slowdown in the expansion of the civilian labor force and
steady job growth pushed unemployment down to 4.9 percent
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
-1,000.0
-800.0
-600.0
-400.0
-200.0
0.0
200.0
400.0
600.0
Unemploymentrate(%)
1-monthnetchange(thousands)
Monthly employment change Unemployment rate
Source: JLL Research, Bureau of Labor Statistics
5
6. Job openings dropped to 5.4 million, but remain well above
previous peaks and indicate sustained demand for labor
Source: JLL Research, Bureau of Labor Statistics
6
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Jobopenings(thousands)
7. 1.7%
2.7%
2.7%
3.2%
3.4%
3.4%
3.8%
4.4%
4.6%
4.7%
1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0%
Mining and logging
Manufacturing
Construction
Information
Trade, transportation and utilities
Other services
Financial activities
Education and health
Professional and business services
Leisure and hospitality
Job openings rate
Job openings rates across industries largely above the 3.0-
percent mark, outpacing job creation
Source: JLL Research, Bureau of Labor Statistics
7
8. 0
1,000
2,000
3,000
4,000
5,000
6,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Hiresandquits(thousands)
Hires Quits
Both hires and quits show more stability than job openings as
employee confidence and options grow
Source: JLL Research, Bureau of Labor Statistics
9. Continued labor market tightening has pushed wage growth to
2.8 percent, its highest figure since 2009
Source: JLL Research, Bureau of Labor Statistics – CPI data as of March 2016
9
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
2008 2009 2010 2011 2012 2013 2014 2015 2016
12-month%change
Hourly wage growth CPI growth
10. 1.8%
2.4%
2.5%
2.5%
2.9%
3.2%
3.3%
3.7%
4.6%
5.2%
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0%
Education and health
Trade, transportation and utilities
Other services
Professional and business services
Financial activities
Construction
Manufacturing
Mining and logging
Leisure and hospitality
Information
12-month % change in wages
Information sees wage growth surge past 5.0 percent, while
only education and health falls below the 2.0-percent mark
Source: JLL Research, Bureau of Labor Statistics – office-using sectors in red
10
11. Growth in the labor force is approaching the rate of job
creation, but not fast enough to ease talent shortages
Source: JLL Research, Bureau of Labor Statistics
11
-6.0%
-5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
2008 2009 2010 2011 2012 2013 2014 2015 2016
12-month%change
Civilian labor force Total non-farm
12. The pause in the civilian labor market resulted in a 10bp
decline in participation to 62.8 percent
Source: JLL Research, Bureau of Labor Statistics
12
60%
61%
62%
63%
64%
65%
66%
67%
2008 2009 2010 2011 2012 2013 2014 2015 2016
Laborforceparticipationrate(%)
13. -9.0
-5.0
-4.0
-2.0
-1.1
-0.1
0.9
4.0
6.0
6.3
6.4
7.5
10.0
11.0
14.0
19.0
39.1
43.0
52.0
-20 -10 0 10 20 30 40 50 60
Manufacturing
Durable goods
Nondurable goods
Mining and logging
Retail trade
Motor vehicles and parts
Utilities
Information
Other services
Wholesale trade
Temporary help services
Transportation and warehousing
Leisure and hospitality
Construction
Financial activities
Government
Health care and social assistance
Professional and business services
Education and health services
1-month net change (thousands)
Contractions or slowdowns in a number of normally large
contributors (retail, leisure) pulled down October growth
13
Source: JLL Research, Bureau of Labor Statistics
14. -108.0
-88.0
-53.0
4.1
5.0
10.0
35.0
39.0
58.0
58.9
84.0
172.0
195.0
208.0
290.2
304.0
500.8
542.0
591.0
-200 0 200 400 600 800
Mining and logging
Durable goods
Manufacturing
Motor vehicles and parts
Utilities
Information
Nondurable goods
Temporary help services
Wholesale trade
Transportation and warehousing
Other services
Financial activities
Construction
Government
Retail trade
Leisure and hospitality
Health care and social assistance
Professional and business services
Education and health services
12-month net change (thousands)
591.0
542.0
304.0
290.2
172.0
457.8
Education and health PBS
Leisure and hospitality Retail trade
Financial activities Manufacturing
All other jobs
Annual job growth and composition of gains have been highly
consistent in recent months
Source: JLL Research, Bureau of Labor Statistics
14
Core subsectors added 80.6 percent
of all jobs over the past 12 months.
16. Office-using employment growth shows no end to volatility, but
overall figures are nearing YTD 2015 levels
-300
-250
-200
-150
-100
-50
0
50
100
150
200
2009 2010 2011 2012 2013 2014 2015 2016
1-monthnetchange(thousands)
Information Professional and business services Financial activities
Source: JLL Research, Bureau of Labor Statistics
16
17. Tech steady at 4.5 percent as industry cools due to talent
shortage and lack of slack in the market
-11.0
-9.0
-7.0
-5.0
-3.0
-1.0
1.0
3.0
5.0
7.0
9.0
2008 2009 2010 2011 2012 2013 2014 2015 2016
High-tech Energy, Mining, and Utilities Office-using industries Total non-farm
Source: JLL Research, Moody’s. Note: Due to data lags, high-tech employment only available through September 2016
17
12-month%change(jobs)
18. Despite a slight bump, the moving average for initial claims
remains near cyclical low and below the 260,000 mark
Source: JLL Research, U.S. Department of Labor
18
200,000
250,000
300,000
350,000
400,000
450,000
500,000
550,000
600,000
650,000
700,000
Claims
Initial claims 4-week moving average
20. Florida remains the leader in local employment growth due to
cyclical volatility and diversified growth
Source: JLL Research, Bureau of Labor Statistics
20
Dallas
3.6%
Seattle
3.5%
Fort
Lauderdale
4.4%
Fort
Lauderdale
4.7%
Denver
3.3%
Silicon
Valley
3.6%
21. Total employment dropped once again to 9.5 percent, the
lowest level since 2008
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
Totalunemployment(%)
Total unemployment U-6 10-year average
Source: JLL Research, Bureau of Labor Statistics
21